What are your thoughts about assets? You concentrate on profit and cash flow in your analysis, but in 2020 Cathay had assets of 26 Billion (!) US$. There are more ways to repay debt, plus the price to book ratio is currently at a comfortable 0.64. A label as zombie company is a bit drastic in light of the actual
balance sheet in my opinion.
It also acts as a red flag that that the Company value could deteriorate. That variable being the convertible bonds issued.
Swire have financially engineered equity with the expectation of a return to profit by 2021. The deferred dividend payments illustrate this.
The Swire logo that adorns the tails of all their aircraft is being painted red and there isn’t any yellow stars appearing.
Globo, yes there was a slight reduction of revenue caused by the protests, but you have to keep that into perspective. The revenue in 2018 was 14.238 Billion, in 2019 it was 13.714 Billion. The gross profit was actually higher in
2019 than in 2018, at 2.814 Billion compared to 2.751 Billion
Revenue rose on the capacity increase, but so do the costs. You can keep expanding capacity, but the yields collapse.
CX were forced to do this as their competitors seized the opportunity from the disastrous fuel hedge. All those old fuel hungy B744’s became useful, but CX were forced to retire to seek fuel savings, lowering their ROCE.
This slow motion train wreck has been in motion for the past 5 years.